Papers released today paint a picture of an IRD teetering on the brink of calamity and where the systems and culture are so inefficient half of Inland Revenue’s data entry staff are engaged full-time in correcting the data entries made by the other half.

The department’s “systems and processes are not able to sustain or improve tax collection or social policy disbursement”, according to a “risk assessment briefing” prepared for ministers last August.

The IRD is also “not able to implement policy or operational initiatives in a timely and cost effective way” and “is not able to adequately respond to deliver better public services and is failing to meet stakeholders' expectations”.

In a cabinet paper by Finance Minister Bill English and Revenue Minister Peter Dunne at around the same time, the issues were put even more starkly.

“We are unable to respond rapidly and economically to government policy changes… We face an increasing risk of a systems failure that would severely damage our ability to collect and disburse money.”

This morning Revenue Minister Peter Dunne released an update on the government’s plans to upgrade the IRD’s systems.

The latest update takes the estimated cost to $1 billion to $1.5 billion over a 10-year period.

Officials and ministers have been talking about the “transformation” of IRD as a project since 2008, when the antiquated state of the department’s systems was identified as a problem during the dying days of the last Labour government.

IRD’s IT systems were mostly devised during the 1990s, when the tax system was relatively simple and before large range of other government programmes, such as Working for Families, KiwiSaver, child support, student loans and paid parental leave were added.

One senior accountant has described IRD’s IT operation as “where obsolete mainframe computers go to die”.

The background papers released this morning also highlight cultural as well as technical issues facing the IRD.

"System complexity has increased dramatically to accommodate Inland Revenue's expanded role in the administration of social policy.

"The technology platform (FIRST) now has approximately 40 million lines of highly intertwined software code, which means it is expensive and time-consuming to adapt the system to new customer requirements, such as smartphone access.”

The complexity of the system also means 550 of the IRD’s 1100 data entry processing staff are engaged full time in correcting other data entries.

Mr Dunne today was putting a positive glow on the number of ad hoc arrangements Inland Revenue’s staff have had to make to the IT systems.

“Basically, system modifications, manual interventions and workarounds have spoken volumes for Kiwi ingenuity, but have resulted in layers of complexity for government and customers alike,” he says.

“It is fair to say the revenue system is at capacity, and the government recognises the need for a substantive transformation programme to shape Inland Revenue to best serve New Zealand in the future.”

At the time of the last Budget, Mr English said the government would not be able to make any major changes to the country’s tax framework even if it had the fiscal headroom to make such changes, because IRD’s IT systems would not cope with any major changes.

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25 Comments & Questions

The big issue for me in this "revelation" is that most people have known for years that the system was inadequate for today's Inland Revenue, which does much more than collect tax. The only people who didn't seem to realise this were Inland Revenue management who have left this transformation to the last possible moment before the system tips over. We should have been at this point years ago.

It is not hard to think of people who pay much less tax than the law requires, and get away with doing so because the IRD is hamstrung by a Heath Robinson IT setup. Such people would be only too happy to let this continue.

I called IRD today at 10.30am. Confirmed with their voice recognition system and an automated message said they were busy, that I should call back, then the line went dead. No callback option here then.
I went online at IRD. This is where it gets really frustrating. You can create an account so you can send them an email, but to confirm the account you have to call them.
But they are too busy to take my call.
Hence, IRD cannot be contacted.

"IRD’s IT systems were mostly devised during the 1990s, when the tax system was relatively simple and before large range of other government programmes, such as Working for Families, KiwiSaver, child support, student loans and paid parental leave were added."

Staff at IRD centres cannot deal with many items that have been centralised. Forms filled out at these centres don't seem to be entered in a way that the that updates a person's complete profile throughout the IRD.
Forms and information apparently disappear or are not entered in a timely manner and the client has no way of proving that they have provided the correct info in the first place.

The IRD, like other central and local government offices, is stuck in the 1970s. We still receive bills and letters via snail mail and cannot get them via the email. People move and travel, we should be able to get info by email. Local businesses can send me a bill via email and I pay it over the net, no problem.

Let's hope we've learnt from Incis, that our contracts are more robust than those around Novapay, and that we commission development and implementation partners whose c--k is as much on the block as ours.

$1 billion to 1.5 billion to fix. This figure has simply been pulled out of a hat. If the whole system falls over, or gets hacked the what ? We pay no tax?
An ad-hoc sytem that has been created and modified the way it has is guafanteed to be full of gaping holes that will make the WINZ security breach seem small small in comparison. And guess what, now that its headline news our data centres are wide open you can guarantee people all over the world are breaking in.
It's time the politicians all went to compulsary IT classes so they understand what they are doing and how urgent this ticking time bomb that is about to explode is.
Just listen to the responses in the debating chamber next time anything remotly IT related is talked about.

1 to 1.5 billion to fix. This figure has simply been pulled out of a hat. If the whole system falls over, or gets hacked the what ? We pay no tax?
An ad-hoc sytem that has been created and modified the way it has is guafanteed to be full of gaping holes that will make the winz security breach seem small small in comparison. And guess what now that its headline news our data centers are wide open you can guarantee people all over the world are breaking in.
Its time the polititians all went to compulsary IT classes so they understand what they are doing and how urgent this ticking time bomb that is about to explode is. Just listen to the responses in the debating chamber next time anything remotly IT related is talked about.

Wellington is out of its depth with the IT revolution ... but they just can't say no to centralising more and more information in their lust for power and control.

It will be the Statists fatal conceit to believe that centralising information is gaining them more power. Because when the whole thing comes grinding to a halt they will be left with exactly nothing. Centralised systems are fragile by definition.

The elephant in the room? IRD culture: It's not the 'system's fault' a significant option of IRD staff don't have enough pride to do their job properly.

It makes me cringe when the IRD hierachy and Dunne come out and tells us how well it is doing and what great feedback it gets and how many phone calls it has answered this year. Anyone who deals with them on a regular basis knows there are some fantatstic people there, but that there is overall a almost complete lack of any 'customer service mentality', lack of commerciality, and zero accountability (and yes I worked there for a while before seeing the light).